This is who really loses out when Justin Bieber cancels a show

Who pays?Before embarking on a tour, most acts take out non-appearance insurance. This is to protect their income in case of a force majeure, serious accident or illness rendering them unable to perform.

(Justin Bieber performs during his world tour in Beijing, China, on Sept. 29, 2013. Canadian Press)

This is who really loses out when Justin Bieber cancels a show

Justin Bieber broke hearts and Twitter on July 25 when he abruptly cancelled the remaining shows in his Purpose tour due to ‘unforeseen circumstances.’

Having completed 154 shows in the past 18 months, the 23-year-old Despacito singer was scheduled to perform in Japan, Hong Kong, Philippines and Singapore, along with additional U.S. cities and two shows at Toronto’s Rogers Centre.

Some Beliebers ware devastated. For others, it’s too late now to say sorry. But as Bieber announces he’s skipping the remaining 14 shows, it’s just not fans who are disappointed — it’s backup musicians, dancers, personal trainers, chefs, makeup artists and crew members who may not get the pay they were initially promised. On the venue side, there’s event ushers, security, stage crew, box office staff and merchandise vendors to consider.

Who’s on the hook?

Before embarking on a tour, most acts take out non-appearance insurance. This is to protect their income in case of a force majeure, serious accident or illness rendering them unable to perform. Sometimes these acts include the inner circle in their insurance contract; sometimes they don’t.

“It’s been different with every person: they have their own idea of what percentage they want to cover — if they’ll cover the commissions, or not cover the commissions, so that the people [who] work with them will get paid. Sometimes the personal managers, the business managers and the booking agents pay part of the premium, so they’re the agents that would be covered if something happens. It’s just really all across the board” says Nashville-based entertainment insurance expert Robert Frost on the Grammy’s website.

Insurance is expensive however, and Frost indicates in the same interview that it could cost up to three per cent of the amount the artist insures. As of May 2017, Beiber’s overall gross earnings from the Purpose tour were estimated at just under US$200 million since the tour’s launch in March 2016. If Bieber bought full coverage, he would have had to pay upwards of US$6 million for it.

Bieber will probably have to give refunds out of pocket

According to concert trade publication Pollstar, Bieber ranks fifth on the Global Concert Pulse list that ranks each artist by average box-office gross per city worldwide. In July 2017 alone, Bieber grossed US$3,193,681 in ticket sales, with average ticket price of US$109.34. Will he have to give it back? In all likelihood, yes.

“When an artist cancels prior to the show, the expenses incurred up to that point in time are typically paid for by the promoter with one of two outcomes,” says Jerry Mickelson of Jam Productions, which promotes Tegan and Sara, Beck and Haim shows among others. “Either the promoter gets reimbursed by the act if if the engagement is not rescheduled or the cancellation expenses are paid for once the show takes place.”

Toronto sports and music venue Rogers Centre seats anywhere between 10,000 and 50,000 for a concert. If Bieber sold 25,000 seats for each of the cancelled Sept. 5 and 6 Toronto shows at the U.S. average ticket price, that’s US$5,467,000 in gross tickets sales — over $6.8 million in local currency.

The most common reasons for last-minute cancellations are illness and bad weather, according to the Washington Post. Bieber’s statement already says tickets will be refunded at point of purchase, but non-performance insurance contracts don’t typically include being “over it” as an reason to cancel a scheduled concert. If celebrity news site TMZ’s report that he would be spending time on “resting, relaxation gonna ride some bikes,” is true, the pop idol will likely be footing the bill for the refunds himself.

Fans may not get their money back

Even if ticket sales are refunded at point of purchase, it’s a potential loss for fans who bought the tickets from resale sites or internet classifieds. StubHub refunds money only if an event is cancelled, not if it’s postponed. Craigslist or Kijiji buyers are even more vulnerable because refunds are given to the original buyer direct from the promoter, so it would be up to the original buyer to pass it on. It’s not always possible due to finite supply, but fans would be better off buying expensive tickets directly from a site such as Ticketmaster, and spending a few extra dollars on event ticket insurance in case they’re unable to go.

If tour merchandise has already been manufactured, Jam Productions’ Mickelson says that’s a discussion the artist needs to have directly with the merchandising company. But one company isn’t too upset. Australian streetwear seller Culture Kings capitalized on the scrapped tour right away, posting photos of Purpose tour t-shirts with the message “These are the last pieces [of Purpose tour clothing] left in the world right now and due to the tour’s cancellation, the resell value on these pieces has skyrocketed and have become instant classics.”

Cancelled shows still won’t affect Bieber’s popularity

In spite of far-reaching and potentially damaging financial consequences, a musician’s reputation is not significantly affected by a cancelled tour, Music hall promoter and booking agent Michael Jarowek, Birchmere told the Washington Post.

“From a career standpoint, it rarely hurts artist to cancel dates if their momentum is building and strong and they aren’t out of action for months.”